Office of the Historian

611.65/5–1454

No. 777
The Secretary of State to the Director of the Foreign Operations Administration (Stassen)1

top secret
Washington, May 14, 1954.

Dear Mr. Stassen: In my brief meeting with Prime Minister Scelba in Milan on May 3,2 he referred to an alleged promise on our part to give additional economic aid to Italy and in this connection asked that a mission of technical experts be sent to Italy to recommend measures for the transformation of the Italian economy. I enclose a copy of the message from Rome reporting on this conversation (Rome’s telegram 3514, May 4, 1954)3 and a copy of the informal note which Scelba left with me on May 3.

Prime Minister Scelba’s reference to a further aid program left all of us puzzled and since our return we have made a search of the various communications to Mrs. Luce and to Scelba himself to ascertain on what message or passage Scelba’s misunderstanding [Page 1682] might have rested. We have concluded that the only passage which might possibly explain his misunderstanding is a paragraph in the letter which I sent to Mrs. Luce on January 144 in accordance with the decision of the group which met in my office on January 2, 19545 in which you participated. I am enclosing also a copy of that letter. Under instructions, Mrs. Luce showed this letter to Premier Scelba and to others in the Italian Government. You will note that the third paragraph reads as follows:

“I am confident that the Communists’ power in Italy could be significantly reduced by full and effective use of existing political instrumentalities. If this could be done, and if the Italian people and Government could decisively reverse the present dangerous trend and reject Communism, the President has indicated that he would, in recognition of Italy’s grave problems, be prepared to support a special aid program for Italy.”

The reference to the special aid program stemmed from a statement made by the President to Mrs. Luce on the occasion of Mrs. Luce’s visit. However, I would point out that my letter refers to the possibility of such a program only following a decisive reversal of the present dangerous trend and following a rejection of Communism. We could not, of course, know whether the trend had in fact been reversed until new political tests of strength had arisen to make this clear such as, for example, new elections. We are happy, of course, about any Communist measures the Italian Government has initiated and hope they will be implemented fully.

I would appreciate your views regarding Premier Scelba’s proposal for a technical mission to go to Italy. I am inclined to the opinion that sending such a mission at the present time would risk further misleading Scelba as to our intentions regarding aid. There have been various special studies of the Italian economy in the past and by launching another, we might indirectly seem to be committing ourselves to help defray the cost of any recommendations that might result from the study. We may wish, however, to avoid appearing to Scelba entirely negative toward his requests.

If it should develop that this question has already been discussed with the Italians by Embassy or FOA personnel in Rome and if we should decide to make some gesture of accommodation to Scelba’s suggestion, we might ask USRO and our missions in Rome to make a special report with recommendations to you and to me.

Sincerely yours,

John Foster Dulles
[Page 1683]

[Enclosure]

Informal Note From Prime Minister Scelba to the Secretary of State

Assistance required for Italy’s economic development effort

The essence of Italy’s political and economic problem is the need to maintain the rate of economic development attained during the last few years and particularly (as amply shown in international documentation) in 1953. If the effort to develop the country’s depressed areas were to suffer a set-back, the political situation would be gravely endangered.

To offset such a danger it is imperative that for a number of years Italian capital availability continue to be supplemented by means of foreign capital, from both private and public sources.

With regard to the former, Italian legislation in favour of foreign private investment in the country is now in the process of being modified in the sense of maximum liberalisation.

With regard to public sources of capital, the need is apparent that the United States Government, either directly or through such international agencies as NATO, the Export-Import Bank, OEEC and the IBRD, take Italy’s case into special consideration and ensure such provisions as would enable the country to develop the programmes currently under way, at the maximum rate which it is possible to achieve and with a reasonable certainty of completing them.

Were the United States Government to devote some attention to the matter and arrange a meeting at high level of American and Italian experts within the next few months, there is confidence here that ample evidence could be provided of the correct evaluation of the Italian economic problem and the sound basis of the approach to its solution, and hence of the political expediency of supporting the development effort with the utmost urgency.

Milan, 3 May 1954.

P.S. The most recent examination of Italian problems has been made within the last few days at the OEEC in Paris, in the presence of Dr. Neil H. Jacoby, Member of the Council of Economic Advisers.

  1. Drafted by William E. Knight and cleared with Jones, Freund, Moore, and Collins.↩
  2. At the invitation of Prime Minister Scelba, Secretary of State Dulles routed his return trip from Geneva to Washington through Milan where he met with Scelba for about two and a half hours at a villa near the Milan Malpensa Airport. Other participants in the meeting were Luce, Merchant, Durbrow, and Engle for the United States, and Piccioni, Zoppi, and Canali for Italy. The majority of the conversation dealt with Trieste.↩
  3. Not printed here.↩
  4. Not printed. (765.001/1–1454)↩
  5. A memorandum of this conversation is in Secretary’s Memoranda of Conversation, lot 64 D 199, “January 1954”.↩